Helping a friend buy a duplex with 20% down loan--low interest (2%). Need 80% lender

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Helping a friend buy a duplex with 20% down loan--low interest (2%). Need 80% lender

Josh Rowley
Rental Property Investor · Jacksonville, FL · Member since 2013 · 43 posts · 20 votes

Hello creative thinkers, I’m trying to find a reasonable way to help my friend buy a duplex in New York City. I am willing to lend him the 20% down payment at 2% annual interest to help him afford the area. We’re basically looking for a lender that’s OK with a combined loan to value of around 100% the lender themselves would only be an 80% lender. Obviously a hard money type loan would do this kind of thing, but we’re hoping for more of the conforming loan benefits.  He has great credit and sufficient income to be a conforming borrower--other than the down-payment from non-related party and not a gift. Any creative ways to do this? if it helps for perspective, the duplexes are about 900 K and he would be living in one of the units. Owner occupied title in his name.

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
6mo

@Josh Rowley

Hi Josh.  I don't know anything about you or your friend, but this seems like a terrible idea.  Your friend should just look into lower down payment owner occupied options if he's looking to put less than 20% down.

Hope this helps

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    6mo

    @Josh Rowley

    Hi Josh.  I don't know anything about you or your friend, but this seems like a terrible idea.  Your friend should just look into lower down payment owner occupied options if he's looking to put less than 20% down.

    Hope this helps

    2Reply
  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    6mo
    Quote from @Josh Rowley:

    Hello creative thinkers, I’m trying to find a reasonable way to help my friend buy a duplex in New York City. I am willing to lend him the 20% down payment at 2% annual interest to help him afford the area. We’re basically looking for a lender that’s OK with a combined loan to value of around 100% the lender themselves would only be an 80% lender. Obviously a hard money type loan would do this kind of thing, but we’re hoping for more of the conforming loan benefits.  He has great credit and sufficient income to be a conforming borrower--other than the down-payment from non-related party and not a gift. Any creative ways to do this? if it helps for perspective, the duplexes are about 900 K and he would be living in one of the units. Owner occupied title in his name.


    Your friend can put down 3.5% with a FHA loan for a 2 unit bulding up to a loan amount of 1,599,375 in NYC as long as he occupies one of the units. Much better deal for both of you and much more likely to actually be closed.

    Hurst Real Estate, INC4.991 Reviews
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    1Reply
  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    6mo

    Josh, listen to the advice above!

    0Reply
  • Josh Rowley
    OP
    Rental Property Investor · Jacksonville, FL · Member since 2013 · 43 posts · 20 votes
    6mo

    Thank you for the ideas and advice.  The fha may be the way to go.  Part of my complicated goal was to effectively subsidize the cost of 20% of the cost/down payment to make the overall payment more viable.  However, that may be to complicated and force a less favorable loan product and thus higher rates and costs.

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  • Mitch Kowalski
    Flipper/Rehabber · Kansas City, MO · Member since 2026 · 11 posts · 7 votes
    6mo

    Look, this move is going to die at underwriting. Lenders pull bank statements, and 180K showing up from a non-related party right before the application gets flagged as an undisclosed debt and a down payment that isn't sourced and seasoned from your friend's own funds. FHA solo at 3.5% is the cleanest path the other guys pointed at. The thing is, if your real goal is to subsidize the deal so the payment works rather than just fund the down payment, becoming an equity partner where you're on title and take a share of the cash flow is a cleaner play than trying to disguise a loan that lenders are trained to catch.

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  • Jasper JurmanPro Member
    Real Estate Agent · New York City · Member since 2023 · 16 posts · 6 votes
    6mo

    Hi Josh,

    As Jay mentioned, I would try to have your friend go with the 3.5% down FHA. Especially if your friend is going house hack.

    0Reply
  • Tienna Matthews
    Financial Advisor · Tallahassee, Americas · Member since 2025 · 25 posts · 10 votes
    6mo

    @Josh Rowley

    The hard money route you mentioned would absolutely work for acquisition, especially at 80/20 combined LTV with an owner occupant borrower who has strong credit. The play there would be acquire with hard money or private capital at 100% combined financing, season the title for 6 to 12 months, then refinance into a conventional product once the borrower has payment history and the property has seasoned. At that point the original source of the down payment is no longer an underwriting issue.

    On a 900K duplex in NYC with owner occupancy and strong borrower credit, there are capital partners who would look at this seriously. The deal profile actually underwrites well from a lender's perspective, it's just the down payment sourcing structure that makes it tricky on the conforming side.

    Happy to connect if you want to talk through the options in more detail. This is exactly the kind of deal structure I work with regularly.

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